U.S. housing sees a sharp drop in May, gold price edges up

(Kitco News) Gold ticked up, reversing early-morning losses, following the release of the U.S. housing data from May, with housing starts and building permits sliding more than expected.

U.S. housing starts declined 14.4% to a seasonally adjusted annual rate of 1.549 million units in May, the Commerce Department said on Thursday. Consensus forecasts were calling for starts to be around 1.81 million. April’s data was revised to 1.810 million units. For the year, housing starts were down 3.5%.

At the same time, building permits, which are a precursor to future projects, were down 7% at 1.695 million in May after April’s revised total of 1.823 million. For the year, building permits edged up 0.2% from the May 2021 levels.

Gold erased early-morning losses following the data release. August Comex gold futures were last at $1,833.10, up 0.74% on the day.

The sharp drop in May’s U.S. housing data comes at a time when mortgage rates are shooting up, which is cooling the activity in the market.

“[For housing starts,] both single and multi-family building dropped off to leave total starts 3.5% below its year-ago pace,” said CIBC World Markets economist Katherine Judge. “Building permit issuance also slowed by more than expected … Both single and multi-family permits dropped off, and combined with the further slide in homebuilder confidence in June, and the continued climb in mortgage rates, this portends continued weakness in housing starts ahead.”